Eddie Sugar: Keynote: Financing the Resource Industry in Today’s Market
Eddie discusses the resource industry and examines how financing looks in the current market. You need to demonstrate a profit at today’s price levels. Arianne is an example of a company that needs to raise a lot of capital and you would think it would be extremely difficult. However, if that company can show a sustained profit and have committed offtakes the financiers will look at it differently.
You can finance projects at today’s mining prices if the project is good. Gold is the hardest market to predict because it is not used by industry, so predicting what it will do in the future is harder. Industrial metals including silver are a lot easier to figure out. Lithium is a pretty easy one as well since electric vehicle demand will drive lithium to a shortage that will eventually be made up.
If you are working on a project you need to be able to make the business sustainable at today’s prices. He feels we will have stronger GDP growth than most people are predicting. A lot of investors are not as active in the junior space partially due to interest in bitcoin, cannabis, and technology. Projects in some countries are much harder to get financing.
Time Stamp References:
1:00 – Financing in the resource industry.
2:00 – What happened in the lithium space.
3:30 – Sirius Metals financing.
5:20 – Gold is the hardest market to predict.
7:00 – They use a lot of debt markets.
8:30 – Agnostic to jurisdiction and business.
12:30 – How they structure debt.
14:50 – 2012-2014 all the mining companies almost went broke.
18:20 – Plenty of capital out there for the right project.
Talking Points From This Week’s Episode
• Discussion of financing mine development in the current market.
• Companies need to demonstrate potential profits at current prices.
• He is predicting good GDP growth.
• Investors are currently distracted by other markets.
Edward Sugar is Principal at EAS Advisors LLC. He has more than 25-years of experience in the commodities and related sectors. Prior to the founding of EAS, Eddie was the Managing Director of Jefferies & Co. in New York from 1999 until 2008, responsible for international equity sales and trading.
Prior to Jefferies, Eddie worked as Managing Director for Marc Rich & Co. in Sydney, Australia and as a personal and private advisor to Solomon Lew and his associated companies out of Melbourne, Australia.
Following the completion of his Bachelor of Commerce from the University of Wollongong, Eddie began his career in New York as Vice President on the Asian equities sales and trading desk at Barclays de Zoete Wedd (formerly the investment banking arm of Barclays Bank). Eddie holds Series 7, 24, 63, and 79 licenses.